Australia's central bank expects underlying inflation to fall faster than previously expected as it downgraded the economic outlook, although a still tight labour market is likely to create some lingering price pressures.

The RBA cut its cash rate by 25 bps to 4.10%, initiating a new easing cycle amid easing inflation. Click here to read what this means for Australian equities.

The central bank had held its policy rate steady at 4.35% since November 2023, following an extended period of 13 rate hikes to tame inflation at home.